Pivoting and Performance of “Scientific” Entrepreneurs: Evidence from a Field Experiment
This paper argues that if entrepreneurs formulate their problems clearly, develop theories about the implications of their actions, and test these theories, they make better decisions. According to our theory, entrepreneurs who adopt this scientific approach enjoy two levels of precision: first-order precision lowers the variance of the prediction of the value of the business idea; second-order precision enables the entrepreneurs to select more successful ideas. Our theory also predicts that scientist-entrepreneurs pivot fewer times than non-scientist entrepreneurs because second-order precision enables them to converge more quickly towards the final business idea, while non-scientist entrepreneurs pivot more randomly. We test these predictions through a field experiment that employs 16 data points for 250 start-ups over about one year. We teach the treated group to formulate the problem scientifically, and to develop and test theories about their actions, while the control group follows a standard training. Our empirical analysis corroborates the prediction of the theory that a scientific approach enables entrepreneurs to select better ideas and converge towards the final idea with fewer pivots. We also show that scientist entrepreneurs enjoy higher performance.
Alfonso Gambardella, Professor of Corporate Management at Bocconi University, Milan, obtained his PhD in 1991 from the Department of Economics of Stanford University. His primary research interests are in the economics and management of technological innovations and the technology strategies of firms. Along with publications in leading international journals, his book, Markets for Technology (with Ashish Arora e Andrea Fosfuri, MIT Press) is widely cited. He was visiting professor in the Department of Economics, Stanford University (2003 and 2005), and the MIT Sloan School (2015-16). He is Co-Editor of Strategic Management Journal, Fellow of the Strategic Management Society, and member of the Center for Economic and Policy Research (CEPR), London. In 2015-16 he was Chair of the Business Policy and Strategy Division of the US Academy of Management. His website is http://faculty.unibocconi.eu/alfonsogambardella/
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